Barnes & Noble, Microsoft Scale Back Partnership

Barnes & Noble and Microsoft are shaking up their e-reading partnership.

Bloomberg News

Barnes & Noble and Microsoft have agreed to revise their digital-reading partnership, allowing the bookseller to stop developing its Nook e-reading app for computing devices powered by Microsoft software.

Barnes & Noble said it would stop work on apps for Windows 8 computers, phones and tablets, and support a possible Microsoft-created digital-reading service or app. That service, which Microsoft hasn’t announced, was mentioned in a regulatory filing Thursday as “the Microsoft Consumer Reader.”

The revised agreement scales back the companies’ relationship nearly two years after Microsoft pledged more than $600 million to prop up Barnes & Noble’s digital-reading business. In return, Barnes & Noble committed to creating e-reading apps for new computers, phone and tablets powered by Microsoft’s Windows software.

Since the deal was struck, circumstances for each company have changed. Barnes & Noble slowed work on its own e-reading devices and tablets as its sales slumped, and laid off much of the workforce devoted to its Nook devices. Microsoft’s consumer-device strategy also has shifted after sales hiccups for its Windows tablets and smartphones.

The revised pact, which was disclosed in a regulatory filing, will help Nook preserve the cash that would have been used to develop the new app, while still providing e-reading content for Microsoft.

A Microsoft spokesman said the company is “always looking for ways to evolve and innovate on our app experiences for customers.” He declined to offer further details about the consumer-reader platform.

A Barnes & Noble spokeswoman said the company looks “forward to continuing our partnership and expanding the availability of Nook content.”

The foundering bookseller has suffered as its Nook device — the company’s effort to horn in on Amazon.com 's massive edge in the e-book market –failed to catch on. In January, the company said holiday-quarter revenue at the Nook segment fell 50%, to $157 million. Digital content sales dropped 26%. Nonetheless, the company said last month that it would launch a new color Nook e-reader.